I can say with confidence that there is a lot of uncertainty and confusion around the Paycheck Protection Program and it’s rollout, especially from the point of view of expectant business owners. Right now in the financial world, we need to empower borrowers in crisis. What scares me about the PPP is the false sense of security that the government and the media have given businesses.
Here is what is really happening behind the headlines, from the frontlines in the finance world:
Yes, funds are going to be deployed. But, not in a matter of days. Businesses that have existing credit with their financial institutions received PPP funds before others. And, those who have not received an invitation from their bank to apply should expect their funding to be a 1-2 weeks out.
A bank is a business. Banks were also hit overnight from COVID-19 causing their borrowers to defer or default on their payments. Banks needed to ensure that their most valuable, top tier customers did not have a bad experience during this time (which could have resulted in lost deposits and substantial fee income drops, which banks depend on for income).
Once banks stabilize their own business, they are going to allow non-bank customers to apply. The FED announced Thursday that capital requirements and risk tolerance were no longer taken into consideration with participating PPP banks. This is a game changer, and businesses can expect the next two weeks to be nothing like the initial rollout.
Contrary to what is being publicized, just because your company has payroll does not mean banks are lining up to distribute $349B to you. There will still be a verification of the owners, entities, and payroll data.
It’s going to be much more in-depth than just the quick forms that have been put in front of businesses to date. Business owners should be prepared with in-depth payroll reports for the last 12 months, info on retirement plans, time off, vacation, sick pay, and more. There will be much more info needed than what has been asked for so far. For a detailed list you can visit our FAQs so you can prepare: https://www.ivylender.com/ppp
What is even considered payroll? You might be surprised! All business owners should have the clear definition and expectation of what is and is not included in the PPP’s definition of payroll. For your convenience we have not only broken down the do’s and don’ts when calculating your payroll expenses. We also provide all of our borrowers with an estimate of what they qualify for once they complete our PPP form.
The good news is that the Treasury recently opened up applications for FinTech lenders to apply to distribute the stimulus dollars many businesses so desperately need. While many people are advising businesses to rush to their banks, I advise borrowers to look to FinTechs. FinTech lenders have a higher risk tolerance and the ability to create cutting edge technology and processes with quicker turnarounds.
My biggest piece of advice: Do not give up, get prepared! Once we all get through this the economy will be even stronger than before and equipped to face the next challenge, which likely will seem much less significant than our current state.
ABOUT Christina Camacho
Christina Camacho is the Founder and CEO of Ivy Lender. Christina spent her banking career working with SMB’s as well as Fortune 500 companies at the top Financial Institutions in the U.S. Christina re-structured a merchant services line of business for a Regional Bank at 26 years old and became the youngest self-funded female founder of a Registered ISO in 2016. Seeking an opportunity to address an underserved market, she created a loan management system that connects brokers, payment processors, and lenders. Her loan marketplace addresses a wide scope of credit profiles for SMB’s across North America and promotes financial inclusion by providing applications with financial literacy. Christina was named 40 under 40 Game Changers in the Payments Space in 2019 by the Electronic Transaction Association and 1 of 50 of the Most Influential Founders in the World by Harrington Star.